Automobile vendor industry struggles amid rising imports of used cars

ISLAMABAD: The automobile vendor industry finds itself in a precarious situation due to low production and the influx of used car imports. However, with the potential growth from new entrants, there is optimism for a boost in the near future.

The auto sector vendors have urged the government to ensure consistency in policies, citing the supply and demand crisis in the local auto industry, which has led to frequent plant shutdowns of original equipment manufacturers (OEMs), adversely impacting vendors.

Nabeel Hashmi, Chairman of Thermosole Industries (Pvt.) Ltd, highlighted the continuous turmoil faced by the local vendor industry due to economic conditions, escalating vehicle prices, and political uncertainty. “Weak demand and recent LC issues have severely affected current businesses, compounded by heavy imports of used cars,” he stated.

Despite these challenges, there are signs of recovery in the local auto industry after experiencing an average 50 percent decline for 18 consecutive months, which bodes well for vendors. “However, sustainable recovery hinges on the new government,” Mr. Hashmi added.

Vendors expressed concerns over their substantial investments in facility upgrades for overall localization, including procuring machinery and tools to manufacture metal and non-metal parts locally. However, these investments are underutilized as plants are operating at less than 60-70 percent capacity due to low volumes and supply chain disruptions.

Anas Khan, Operations Manager at MECAS Engineering Ltd, highlighted the surge in used car imports, stating that from July to January in the current fiscal year, over 21,874 used cars were imported, compared to 2,990 in the same period last year, capturing 30.68 percent of the market share.

Meanwhile, Indus Motor Company (IMC), the assembler of Toyota in Pakistan, announced plans to invest approximately Rs3 billion in plant, machinery, moulds, and equipment for additional localization of parts and components.

Ghulam Abbas
Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]

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